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Helping Job Creators Get the Capital They Need

Posted by Karen Mills and Gene Sperling on
December 08, 2011 at 10:45 AM EST

Today, we can do more to increase the amount of
capital that flows into the hands of entrepreneurs at every stage in the growth
of their companies. Helping these businesses grow is a top priority for
the Obama Administration, as we know that small businesses create most of net
new jobs that are added to the economy each year. We have an economic
imperative to make sure we support these firms through creating an environment
where they have access to capital markets to help facilitate growth at every
stage.

Over the past three years, we have made great
progress in helping small businesses. The President has signed into law
17 tax cuts for small businesses, from greater expensing provisions to the
President’s signature call to eliminate capital gains taxes on certain
investments in small businesses as well as two new small business lending
funds. SBA loans also had an all-time record
year.
Right now, the President continues to call on Congress to cut payroll taxes in
half for nearly 6 million small businesses, providing even more incentives for
them to hire and grow.

Startups and high-growth firms – the biggest
job creators – have different capital needs than other small businesses.
That’s why almost a year ago, we launched Startup America, a White House initiative to
create the best possible climate for high-growth entrepreneurs across the
country. Today, at the Startup America Partnership board meeting hosted at the
White House, we are announcing two important initiatives that show how we are
working to specifically address the needs of startup businesses. And the
President is calling on Congress to do more.

At the same time, the independent Startup America Partnership has mobilized commitments
from more than 50 private-sector partners to deliver over $1 billion in value –
from free software to free consulting and legal services – to 100,000 startups
over the next three years.

And there’s more action we can take. In
September, when the President announced his American Jobs Act, he called on Congress to
take specific steps to help small businesses
raise the funds they need to innovate and grow. Consistent with this call
to action, the President is urging Congress to work on a bipartisan basis to
develop these ideas by passing legislation related to:

·Crowdfunding: Nonprofits have already harnessed the
power of online fundraising and social media to help meet their mission. In
a similar way, we can create an appropriate regulatory framework for small
businesses and startups to raise the capital they need from many small-dollar
investors,
while ensuring investor protections.

·

·Regulation A "Mini-Offerings”: For small businesses
seeking to raise less than $5 million, there is an existing exemption from
certain SEC requirements. But very few businesses are taking advantage of
this "Regulation A” exemption today. The President has called for raising
that limit to up to $50 million, making it easier for small companies to raise
the capital they need to grow.

·

·Creating an On-Ramp for Emerging Growth Companies: For emerging
growth companies, the vast majority of new jobs are typically created after
they "go public.” Yet from 1995 to 2010, listings on U.S. exchanges
shrank from 8,000 to 5,000 while listings on non-U.S. exchanges grew from
23,000 to 40,000. In March, after we held an Access to Capital
conference, entrepreneurs and other private sector stakeholders formed an "IPO
task force” and reported back to the Treasury Department with recommendations
to help scale regulations for emerging growth companies while providing strong
investor protections. Some of these ideas are being explored by Congress and
the Administration right now.

·

While moving quickly to pass these initiatives,
Congress must develop these proposals in ways that will continue to protect
American investors. Over the past few months, we have begun to make real
progress. Members on both sides of the aisle have supported legislation
consistent with the ideas that the President called for. Legislation has
passed the House of Representatives with overwhelming bipartisan support. And
last week, these issues were highlighted at a Senate Banking Committee hearing
where Chairman Tim Johnson noted "This is an issue where I believe there is
real potential for bipartisan cooperation.”

Overall, efforts like these could help improve
liquidity for entrepreneurs, and help jump-start the innovative American
companies of tomorrow. At the same time, we need to ensure that as we
develop these initiatives we are taking necessary measures to ensure that
investors are protected – and the Administration will continue working with
Congress to achieve this outcome.

The President, both of us, and leaders across
the private sector understand that "one size doesn’t fit all” when it comes to
helping small businesses, especially startups and high-growth firms.
Let’s make sure they can get access to the kinds of capital they need to grow
and create the jobs we need now.

Karen Mills is the SBA Administrator and Gene
Sperling is the Director of the National Economic Council